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    Malaysian palm oil company Kim Loong Resources Bhd has secured European energy trading group Vitol as buyer for all its carbon credits from its planned biogas plant in Kota Tinggi. The biogas facility generates methane from palm oil mill effluent, a waste product. The project is expected to generate over RM2 million (€423,000/US$579,000) of earnings annually. The methane capture and power generation project was registered and approved by the Clean Development Mechanism. The Edge Daily - July 31, 2007.

    GreenHunter Energy, Inc. announces that its wholly-owned subsidiary, GreenHunter BioFuels, Inc., located in Houston, Texas has successfully acquired Air Emission Permits from TCEQ (Texas Commission of Environmental Quality) under TCEQ's Permit by Rule (PBR) programs. These permits open the way for construction of a 105 million gallon per year (mgy) biodiesel facility including a separate but related methanol distillation facility. PRNewswire - July 30, 2007.

    Together with Chemical & Engineering News' Stephen K. Ritter, the journal Environmental Science & Technology sent Erika D. Engelhaupt to Brazil from where she wrote daily dispatches of news and observations about biofuels research. In particular she focuses on a bioenerrgy research partnership between the American Chemical Society, the Brazilian Chemical Society, and the Brazilian Agricultural Research Corporation (EMBRAPA). Check out her blog. Dipatches from Brazil - July 28, 2007.

    Consultation is under way on a £50 million (€74/US$101million) renewable energy plant planned for the South Wales Valleys. Anglo-Dutch company Express Power plans to build a wood-fuelled biomass plant on Rassau Industrial Estate in Blaenau Gwent. The plant will generate an annual 160,000 MWh (Mega Watt hours) of green electricity for Wales from forestry, recycled wood and wood derivatives. ICWales - July 27, 2007.

    The price of New York crude leapt to 77.24 dollar a barrel on Thursday, marking the highest level since August 9, 2006, as keen global demand and tight supplies fuelled speculative buying, traders said. On Wednesday, the US government had revealed that inventories of American crude fell by 1.1 million barrels last week. France24 - July 26, 2007.

    Arriva, one of Europe's largest transport groups is trialling B20 biodiesel for the first time on 75 of its buses. The company is aiming to reduce total carbon emissions by around 14 per cent by using biodiesel as a 20 per cent blend (predominantly be a mixture of sustainable soya products, along with used cooking oil and tallow). The 75 buses in the innovative trial will carry around 130,000 passengers every week. Minimal engineering changes will be required to the fleet as part of the scheme. Arriva - July 26, 2007.

    Marathon Oil Corporation announces that it has completed two more projects adding biodiesel blended fuel at its Robinson and Champaign terminals in Illinois. The terminals now feature in-line ratio blending in order to provide soy-based B-2 (two percent biodiesel) and B-11 (eleven percent biodiesel). Marathon Oil - July 25, 2007.

    Norway-based renewable energy firm Global Green One has agreed to set up a € 101.6 million bioethanol plant in Békéscsaba (southeast Hungary), with more facilities planned for Kalocsa, Szombathely and Kõszeg, the latter of which was already a target for a €25 million plant in May this year. The Békéscsaba plant would process 200,000 tonnes of maize per year, employing around 100 people. The logistics part of the facility would also create 100 jobs. The company expects the factory to generate €65 million in revenues each year. Portfolio - July 25, 2007.

    A Canadian firm, Buchanan Renewable Energies, is to begin an investment into Liberia's biomass industry that will grow to US$20 million in October and offer 300 jobs by end of the year. The company will start shipping 90 major pieces of equipment to Liberia by the end of August. Daily Observer (Monrovia) - July 24, 2007.

    KNM Process Systems Sdn Bhd, has secured a RM122 million (€26/$36m) order to build a biodiesel plant in Pahang, Malaysia, for Mission Biofuels Sdn Bhd, a subsidiary of Australian biofuels company Mission Biofuels Ltd. The plant will have a biodiesel output of 750 tonnes per day and glycerine output of 82 tonnes per day. Malaysia Business Times - July 24, 2007.

    AlgoDyne Ethanol Energy Inc. confirms that its retail partner, Canadian Green Fuels, has entered into an agreement with Cansource BioFuels to open a new biodiesel production facility in Mayerthorpe Alberta. The deal will see the construction and development of a community based, integrated crushing and biodiesel facility to process 10 million litres of ASTM certified canola based biodiesel which will be scaled up to produce 40million litres by 2010. BusinessWire - July 23, 2007.

    The Center for Management Technology announces the second Biomass-to-Liquids Technology conference will take place in Vienna this year, from 12 to 13 September. The current state of BTL-technologies will be presented and discussed. Biomass-to-Liquids conversion pathways are seen by many as promising avenues into the world of second generation biofuels that relies on the use of a broad variety of possible biomass feedstocks. CMT - July 23, 2007.

    Gulf Ethanol Corporation, a Houston-based energy company, announced today that it has initiated negotiations with representatives of government and industry in Uruguay. Discussions, coordinated by the U.S. Department of Commerce, centered on the synergy between Gulf Ethanol's interest in exploiting the potential of sorghum as a non-food fuel stock for ethanol production and the ideal conditions for growing the crop in Uruguay. The company criticizes the use of food crops like corn for ethanol in the U.S. and is seeking alternatives. Yahoo Press Release - July 20, 2007.

    Dutch company Capella Capital N.V. announces its investment in BiogasPark N.V. and acquires a 20 % stake upon the foundation of the company. The remaining shares are held by the management and strategic investors. BiogasPark N.V. will invest in the field of renewable energy and primarily focuses on financing, purchasing and the maintenance of biogas plant facilities. Ad Hoc News - July 20, 2007.

    Bioenergy company Mascoma Corp. is to build the world's first commercial scale cellulosic ethanol plant in Michigan where it will collaborate with Michigan State University. The $100 million plant will rely on the biochemical, enzymatic process that breaks down biomass to convert it to sugars. One of the factors that attracted Mascoma to Michigan was the recent $50 million federal grant MSU received to study biofuels in June. MSU will help in areas such as pretreatment technology for cellulosic ethanol production and energy crops that can be utilized by the plant. The State News - July 20, 2007.

    PetroChina, one of China's biggest oil companies, aims to invest RMB 300 million (€28.7/US$39.6m) in biofuel production development plans. A special fund is also going to be jointly set up by PetroChina and the Ministry of Forestry to reduce carbon emissions. Two thirds of the total investment will be channeled into forestry and biofuel projects in the provinces of Sichuan, Yunnan and Hebei, the remainder goes to creating a China Green Carbon Foundation, jointly managed by PetroChina and the State Forestry Administration. China Knowledge - July 19, 2007.

    Netherlands-based oil, gas, power and chemical industries service group Bateman Litwin N.V. announces it has signed an agreement to acquire Delta-T Corporation, a leading US-based bioethanol technology provider, with a fast growing engineering, procurement and construction division for a total consideration of US$45 million in cash and 11.8 million new ordinary shares in Bateman Litwin. Bateman Litwin - July 18, 2007.

    TexCom, Inc. announced today that it has signed a letter of intent to acquire Biodiesel International Corp. (BIC), and is developing a plan to build an integrated oilseed crushing and biodiesel production facility in Paraguay. The facility, as it is currently contemplated, would process 2,000 metric tons of oil seeds per day, yielding approximately 136,000 metric tons (approximately 39 Million Gallons) of biodiesel and 560,000 metric tons of soy meal pellets per year. Initial feedstock will consist mainly of soybeans that are grown in the immediate area of the proposed production plant in the Provinces of Itapua and Alto Parana. MarketWire - July 18, 2007.

    Spanish power company Elecnor announced that it will build Spain's biggest biodiesel production plant for €70 million (US$96.48 million). The plant, in the port of Gijon in northern Spain, will be ready in 22 months and will produce up to 500,000 tonnes of biodiesel a year from vegetable oil. The plant will be one of the world's biggest. Spain has decided to impose mandatory blending of biofuels with conventional fossil fuels as part of European Union efforts to curb greenhouse gas emissions. Elecnor [*Spanish] - July 18, 2007.

    The University of North Dakota Energy & Environmental Research Center (EERC) conducted a feasibility study to determine the most economical solutions to provide biomass energy to the isolated Chugachmiut Tribal Community in the village of Port Graham, Alaska, located on the Kenai Peninsula about 180 miles southwest of Anchorage. The village is only accessible by air or water, making traditional fossil fuel sources expensive to deliver and alternative forms of energy difficult to implement. The case study based on decentralised bioenergy offers interesting parallels to what would be needed to provide energy to the developing world's huge population that lives in similarly isolated conditions. EERC - July 18, 2007.

    According to a basic market report by Global Industries Inc., world biodiesel sales are expected to exceed 4.7 billion gallons (17.8 billion liters) by 2010. Though Europe, with a share estimated at 84.16% in 2006, constitutes the largest market, and will continue to do so for the coming years, major growth is expected to emanate from the United States. The automobile applications market for biodiesel, with an estimated share of 55.73% in 2006 constitutes the largest as well as the fastest growing end use application. Other applications independently analyzed include the Mining Applications market and the Marine Applications market. PRWeb - July 18, 2007.

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Tuesday, July 10, 2007

An in-depth look at biorefinery concepts

The executive committee of IEA Bioenergy recently held its 59th meeting where it discussed the concept of the integrated biorefinery. Twelve leading experts presented case-studies and analyses on the barriers and opportunities ahead for such efficient factories that will drive the nascent bioeconomy. IEA Bioenergy is an international collaboration in which national experts from research, government, and industry from the IEA's Member Countries pool R&D in the area of bioenergy and formulate strategies on how to foster the deployment of bioenergy worldwide.

Put in simple terms, the concept of the biorefinery is based on converting series of renewable biomass streams via biochemical and thermochemical conversion pathways into an optimal range of products: biofuels, power and heat, biomaterials and green platform and bulk chemicals. All this must be achieved in as efficient a manner as possible by integrating conversion processes. In this sense, biorefining is analogous to the operations at refineries in the petrochemical industry.

The first session at the excom meeting provided an overview of the strategies that various countries are using to accelerate the commercialisation of the biorefinery concept, with a main focus on biochemical conversion. In a second session, thermochemical conversion technologies, 'Integrated Biomass Utilisation Systems' (IBUS), and Integrated Cereal Production were discussed. In a next gathering, the experts looked at strategies aimed at making use of entire plants and byproducts, also called 'bio-cascading'. The final session was entirely devoted to Iogen's experience and to the U.S. Department of Energy's activities at its Golden Field Office. What follows are some highlights from these presentations, which allow for a deeper understanding of the challenges ahead for the establishment of biorefineries.

Paths to commercialisation
In his presentation titled Biorefinery, the Bridge Between Agriculture and Chemistry Ed de Jong of the Wageningen University and Research Centre (WUR) in the Netherlands sketched the relationship between agricultural feedstocks for a bio-based chemical industry.

The major bridge between agriculture and chemistry is different in every country. For example, in the USA, security of the supply of feedstocks for the agriculture and chemical industries is the most important issue. Without reliable feedstocks, the chemical industry cannot depend on biomass as a major feedstock in chemical processing. Other countries have made efforts to ensure that finished products are produced by biomass feedstocks. In Holland, a number of task forces have been established to increase development of bioenergy, specifically 30% from biomass by 2030. In addressing these issues, many countries realise the importance of supply chains and co-production of alternative products through biomass:
:: :: :: :: :: :: :: :: :: ::

The contribution to farmers from the supply chain is also important because producing and selling biomass needs to be economically feasible for farmers. A combination of different products from both the farmer and the chemical industry will increase potential revenue and provide stronger incentives. The importance of co-products is exemplified in a pilot plant established in northern Holland ten years ago, which converted grass into products with multiple applications.

There is renewed interest from the chemical industry in the pulp and paper industry because of rising prices of traditional feedstocks, and pulp and paper waste streams are now a more economically feasible feedstock. Chemicals can be made from biomass without major inputs. When converting biomass-to-ethanol, the by-products produced are almost equal in value to the ethanol produced. Ethanol can be easily transformed into a chemical and can develop other materials, increasing the attractiveness of the chemical.

There are advantages of small-scale processing, such as harvesting in the fields with lower transport costs and reduced water. The disadvantages are that economies of scale in small-scale processing prevent profits for biological processes. A major need is to lower raw material costs and have better refinery separation technologies and downstream processes.

Interestingly, as an example of small-scale and decentralised biorefineries, de Jong pointed at mobile cassava starch processing plants that are under development. Such mobile factories may provide a starting point for the creation of future small biorefineries in the developing world.

The integrated biorefinery increases the value chain of individual biomass components as well as co-products produced. The biorefinery bridges the gap between agriculture and the chemical industries by providing a stream for biomass feedstocks and producing a menu of finished chemical products. When these products are produced from non fossil-fuelled feedstock, they also strategically achieve country goals of renewable energy production.

In Commercialising Biorefineries: The Path Forward, Larry Russo of the U.S. Department of Energy started out by providing an overview of America's R&D activities that will bring commercially viable biorefineries to the market.

This presentation covered the multi-faceted strategy and timeframe based on analysis, a presidential initiative, and the drive to reduce dependence on foreign oil.

In April 2005, the US Department of Energy (DOE) published the study entitled 'Biomass as Feedstock for Bioenergy and Bio Products Industry: The Technical Feasibility of a Billion Ton Annual Supply'. This report indicated that USA has the potential to displace 30% of current USA petroleum consumption using a variety of biomass feedstocks such as corn stover, wheat straw, and switch grass. This analysis provided the foundation for DOE to pursue a strategy that examines multiple biomass feedstocks.

USA biomass R&D effort was further shaped by the announcement of the Presidential Biofuels Initiative. This initiative set the goal in 2004 to achieve biofuels production to displace 30% of the nation’s gasoline use by 2030. This presidential goal is in response to the need for a domestic fuel source to reduce USA dependence on foreign oil. To achieve this goal, USA structured its government-funded research portfolio along five pathways:
  1. Feedstock R&D
  2. Biochemical R&D
  3. Thermochemical R&D
  4. Products R&D
  5. Balance of Plant
Through this multiple-pathway approach, USA will deploy integrated biorefineries throughout the country to meet the President’s goal.

In the effort to commercialise the biorefinery concept, DOE considers its critical role to be the mitigation of risk associated with the commercialisation of emerging technologies. At present there is significant private investment in biofuels development, although early failures in R&D efforts could jeopardise further investment. Therefore, DOE plans to provide 80 to 100% of the funds needed for basic R&D and technology development.

As the technologies mature and the projects demonstrate proof-of-concept and commercial viability, the government share of the funding is reduced and more of the financial burden is shifted to the commercial sector. This is the case with US DOE 932 solicitation, which aims to provide loan guarantees for the development of commercial biorefineries. These loan guarantees mitigate the financial burden on lending institutions because the USA government is held responsible should the recipient default on the loan.

Although a major portion of USA policy aimed at reducing the nation’s dependence on foreign oil is centred on biofuels, USA recognises the need for a balanced approach to achieving its goal. USA has begun to examine the need for more flexible fuel vehicles and improvements in the fuelling infrastructure. DOE also is pursuing efforts to improve the efficiency of automobiles for petroleum combustion, as well as the miles-per-gallon that can be achieved with ethanol fuels. USA believes that the goal of reducing the nation’s dependence on foreign oil can be achieved most readily through these efforts to develop biorefineries while also improving vehicle fuel efficiencies and the fuelling infrastructure.

Bob Wooley, of the United States National Renewable Energy Laboratory (NREL) spoke about Insuring Success through Stage Gate and Beyond. The 'Stage Gate Process' that the DOE is using to track the progress of the projects within its R&D portfolio was the main focus of the presentation.

This Stage Gate process enables the evaluation of a project’s performance in bringing science and technology to commercial applications quicker, at lower costs, and with improved probability of success. This is accomplished by tracking the project from the beginning of the R&D stage. This process provides a framework for each project to go through a series of stage gate reviews before receiving support to progress to the next stage. Each stage begins with heavy government involvement and moves toward more industry involvement as a project progresses. In this process, commercialisation must be the end goal. The process is structured to incorporate steps such as exploratory research, development research, and technical support to address problems that will occur when moving to the commercialisation phase.

In the Stage Gate process, it is important to review previously completed work. During this review, it may be determined that a project should be stopped. The process may also determine whether there are incomplete parts and more work is needed, or whether a project could proceed to the next stage. The final assessment is critical to making sure that the best projects are being pursued.

The Stage Gate process is not a new concept. The Independent Project Analysis, Inc. (IPA), originated under the Rand Corporation in the 1970s, has used this process for a variety of research portfolios including evaluating the synfuels industry. IPA independently measures the performance of capital projects and the risk of possible unknown factors, determines what can be done to mitigate these issues, and predicts project success based on the research factors. It makes suggestions on how outcomes of commercial projects can be improved. DOE has enlisted the services of IPA to help implement the Stage Gate Process and manage the DOE biorefinery development projects, to ensure projects will be successful.

Finally, the first session saw Dan Schell, also of the NREL, discussing ways of Proving Biochemical Technologies at the Pilot-scale for Integrated Biorefinery Development.

Schell first outlined the different biomass conversion paths, with the biochemical route only being one of those. Thermochemical pathways consist of biomass gasification and pyrolysis. Different plant components require separate processing routes.

These different processes promise the production of a wide range of green and renewable bulk and platform chemicals, depending on which parts of plants are converted.

Schell then gave an overview of NREL’s pilot-scale biochemical biorefinery and how it is a critical tool in furthering the commercialisation of biorefinery technologies. This facility was constructed to generate critical information about the behaviour of the system for use in the design of larger commercial demonstration facilities.

NREL has found that pilot-scale plants are less expensive to build and operate when compared to commercial scale facilities. The rationale behind pilot plants is that they enables the laboratory to test the feasibility of proposed processes and implement process changes. It also enables the laboratory to research solutions to potential bottlenecks that can occur when implementing a new technology or process. This testing arrangement is much more cost effective than demonstrating these new technologies and processes at a commercial facility. Another benefit that the pilot-scale plant provides NREL is the ability to obtain data for design of a full-scale plant for variety of topical areas such as chemical reactions, mass and heat balances, material for construction, control strategies, and operating costs. The plant allows NREL to gather metrics associated with competing technologies in terms of cost and productivity, in order to provide the commercial sector with the data needed for more informed business decisions.

NREL is in the process of adding new capabilities to its pilot plant to enable it to handle a wider range of preterament chemistries. The laboratory is also adding new unit operations and expanding the instrument and control capabilities. These expansions will enable the lab to provide more useful information to the commercial sector and facilitate the deployment of more technologies into the marketplace.

Thermochemical conversion, process integration
Session two was entirely devoted to different thermochemical biomass conversion technologies and process integration.

One of the challenges facing biorefineries is to develop thermochemical technologies that are technically and economically feasible at the appropriate scale for reasonably available biomass resources. The goal of most biorefineries is to produce cost competitive biofuels at approximately US$1/gallon and to mix them with gasoline to meet industry, federal, and state specifications. To achieve this goal, biorefineries need to integrate bioethanol and electricity combined with heat to create processing efficiencies. Biorefinery production facilities have different phases: the demonstration plant, phase one (generation), and commercial plants. Second generation biorefineries are being set up in York, UK and Salamanca, Spain.

David Dayton, NREL, presented: Pilot-scale Thermochemical Technologies for Integrated Biorefinery Development - The Thermochemical Conversion Platform. In this presentation, Dayton explained that biorefineries utilise two main processes, biochemical and thermochemical, in converting raw biomass feedstocks such as wood chips into finished products such as ethanol.

A wide variety of lignocellulosic feedstocks is available even though the bulk will be obtained from forestry operations and wood waste. In line with the 'Billion Ton Study', several economic and technological scenarios for the thermochemical conversion of this woody biomass have been identified.

Thermochemical conversion utilises heat and pressure to convert carbon into finished products. Two main and different thermochemical conversion paths are gasification and pyrolysis. Dayton primarily discussed the gasification route, which results in a hydrogen an carbon monoxide 'syngas' which forms the basis for the transformation into different products.

There are several barriers for thermochemical conversion in biorefineries: analysis, conversion, gas clean-up and conditioning - identified as the barrier with the largest economic impact - , and integration of operations.

Multiple feedstocks necessitate multiple conversion processes, which complicate the process. Gasification of feedstocks is a complex function that needs to incorporate varying levels in the processing equipment. In addition, the waste streams make thermochemical processing more expensive because they must be addressed in order for the processing to be economical.

The improvement of the efficiencies of catalytic tar reforming into fuel ethanol was identified as one of the major processes that needs further advancements, as this step promises to bring considerable reductions in capital and operating costs.

At NREL, most of the work is focused on particulate removal and consolidating as many processes as possible. NREL’s recent focus on fuel synthesis is to produce biofuels from clean syngas. NREL can generate real syngas to test unit operations and study integration issues and catalyst performance issues. Once these technical challenges are addressed and the goals are achieved, major breakthroughs in biorefinery production will ensure that the capacity to produce finished products from renewable resources is available.

In Integrated Biomass Utilisation Systems: Best Basis for Biorefineries, Børge Holm Christensen of Inbicon A/S, Denmark, elaborated the concept of 'Integrated Biomass Utilisation Systems' (IBUS), which began by seeking alternatives for straw and ethanol, has proved to be a good concept.

The key activity of IBUS is the integrated utilisation of sugar/starch and lignocellulosic feedstocks. Most crops comprise both sugar or starch and lignocellulose. Lower cost processes use a single process and then separate the feedstock at the plant, enabling collection of more biomass within a given area and substantial process synergies.

In integrated production of bioethanol and electricity, a feedstock such as straw loses 55 to 65% of the input energy, and ethanol fermentation loses 3 to 5% of the input energy as heat. The huge loss of heat energy from the global electricity generation can be used to cover the demand for heat energy in future fuel ethanol production. The solution to these losses is co-production.

The IBUS system requires less energy and therefore has low energy costs. Use of low pressure steam from electricity generation means energy can be used without CO2 emissions. It can also recycle the by-products, does not have waste water, and does not emit volatile organic compounds. IBUS can use this pre-treatment process to enter various stages in the biorefinery.

The IBUS concept utilises the surplus steam to produce high-quality solid biofuel increases. The primary result of the EU project is the co-production of biofuels.

Abengoa Bioenergy, a leading biofuel & biorefinery developer and a subsidiary of Spanish group Abengoa, was represented by Quang Nguyen, who explained his company's vision on the Integration of Biomass and Cereal Ethanol Production. Abengoa is a technology company founded in Seville, Spain, and it operates in more than 40 countries. Its approach to biorefineries is to integrate starch-hybrid and biomass. It has strategic interests in producing fuels for future technologies such as hydrogen, and it considers ethanol production the basis for hydrogen fuels.

Its products and processes include: corn to milling to cooking to liquefaction to saccharification, and fermentation to distillation to product recovery. The company sees this as conversion technologies ('first generation') that will be further developed over the medium term.

For the longer term, Abengoa is currently working on the development of a thermochemical pathway for conversion of any carbonaceous feedstock to ethanol. Current projects include a biorefinery pilot plant in York, UK, sponsored by DOE, which converts 1.5 ton/day of biomass feedstocks from corn stover, wheat straw, and switch grass. Abengoa also has a biomass ethanol commercial demonstration plant in Salamanca, Spain, supported by the European Commission, which uses 70 tons/day wheat straw as a feedstock and produces 5 million L/y ethanol.

Abengoa has various gasification, catalyst development, and ethanol reforming projects. One such project is a hybrid starch and biomass commercial plant in a conceptual design phase. Its output will be 700 tons/day, integrated with a cereal ethanol plant.

Biomass conversion challenges for Abengoa and all biorefinery plants are that biomass feedstocks are complex, varying, and bulky; feedstock collection logistics are complex; and the cellulosic biomass feedstocks are more recalcitrant than starch.

Three presentations were held during the session on 'bio-cascading'. Bio-cascading - making use of whole plants and not just their easily extractable sugars or starches - will be crucial because biomass resources are limited. Just as petroleum refineries produce gasoline as their main product, but also produce many valuable co-products, so too does the integrated biorefinery attempt to utilise the entire feedstock stream to produce biofuels and valuable co-products.

One goal is to incorporate conversion R&D and demonstrate for adoption in an existing biorefinery facility. The technical challenge is to avoid hydrolysis degradation products and use fibres in corn ethanol products. It is important that by-products from biodiesel and the sugar industry are upgraded. There are also issues of transportation and more efficient processes, which could be overcome by using cheaper and more efficient feedstocks.

Michael Ladisch of the Purdue University in the U.S. co-repsented with Gary Welch of Aventine Renewable Energy on Incorporating Conversion R&D and Testing Adaptation in an Existing Facility. They started by saying that there is a strong motivation to incorporate R&D conversion technologies and adaptation testing in existing facilities in order to reduce the dependence on oil. Another driver is the presidential mandate to reduce USA dependence on oil through the President’s ‘Twenty in Ten’ goal. NREL is working with industry, federal and state government, and universities in a collaborative effort to achieve these goals.

Ethanol, used as fuel additive as well as a stand-alone product such as E85, will help achieve the goals to reduce dependence on oil. Corn to ethanol currently accounts for 13% of all ethanol in USA. However, corn is also needed for food (both domestic and exports) and animal feed, and using it for ethanol has an impact on food costs because it places higher demand on the corn, which in turns raises its price. The amount of corn available to produce ethanol is insufficient; that, and because of its other uses, is why cellulose is needed. Corn will continue to be important, but will only account for a fraction of the production.

Thomas Willke of the Federal Agricultural Research Centre Institute of Technology and Biosystems Engineering, Germany, looked at Upgrading of By-products from Biodiesel and Sugar Industry by Bioconversion and Chemical Catalysis. The presentation offers an overview of the Federal Agricultural Research Centre Institute of Technology and Biosystems Engineering. The Centre has identified several main barriers toward the integrated biorefinery. Biomass transport, pre-treatment, conversion, production, and energy costs are all barriers that must be addressed in order to upgrade by-products from the biodiesel and sugar industries through bioconversion and chemical catalysis.

Willke explained that many of the most important platform chemicals that can be obtained from biomass can be extracted from byproducts from both the biodiesel and ethanol industries.

When it comes to both the production of ethanol as well as the utilisation of its byproducts, reliance on immobilised cells has many advantages over traditional fermentation (based on yeast).

An example of the advantage of immobilisation for the extraction of green chemicals would be the production of palatinose (isomaltulose), a healthy sweetener used increasingly in the food processing industry. If ethanol production were to be based on immobilisation, production of this product could be easily integrated into the biorefinery.

Willke zoomed in on another cascading strategy in ethanol biorefineries that can be build around the production of itaconic acid from sugars, a compound used widely in the production of polymers. Esters of itaconic acid can be used in paint, ion-exchange resin, lubricant, binder, plasticizer, sealant and molding plastics. Some other itaconic acid derivatives are used in medicine, cosmetics, lubricant, thickener, herbcide and wool modifier.

Finally, as an example of cascading byproduct use from biodiesel production, attention was given to 1,3-Propanediol which can be obtained from glycerol (glycerine). Glycerol is the major biodiesel byproduct, for which many applications are being researched (earlier post, and links there). 1,3-Propanediol finds uses in a variety of industrial products including composites, adhesives, laminates, coatings, moldings, novel aliphatic polyesters, copolyesters, solvents, antifreeze and other end uses.

Some important steps for biorefineries to reduce costs are to combine pre-treatment, conservation, and separation, such as in sugar and starch refineries, Willke concluded. The major challenge is the potential for cost reduction in biorefineries such as in transportation efficiency, more efficient processes, and cheaper and more efficient feedstocks.

Finally, Prabhakar Nair, of U.S.-based UOP LLC, discussed how to Commercialise Thermochemical R&D and Pilot Plant Results. Biofuels have had an increasingly important role in global energy demand, with 12 to 15 percent annual growth, Nair says. There are two major bio-based transport fuels: ethanol and biodiesel. USA and Brazil are primary centres for ethanol production, and Europe is the primary centre of biodiesel production. The market today is driven by subsidies to make it competitive. If the proposed mandates set by USA and the EU are adopted, they will create an additional demand for about 3 million barrels per day of renewable transport fuels by 2020.

UOP is a supplier and licensor of processing technology, which was acquired by Honeywell in 2005. UOP can apply refinery processing technology to renewable feedstocks to help the major biorefining centres in the world.

UOP thinks the availability of cellulosic biomass waste and residue streams from agriculture, forestry and industrial sectors alone can make a significant impact on the fuels pool. The potential outlined above does not take into account dedicated biomass plantations. If all these waste streams were to be converted via thermochemical processes into fuels, an equivalent of around 38 million barrels per day could be obtained.

Nair outlined different possible thermochemical routes for the conversion of biomass into both diesel and gasoline alternatives, under which he included the traditional biodiesel production process known as transesterification. He did so in order to compare it with UOP's current 'green diesel' production, which is based on the hydrogenation of vegetable oils (earlier post and here).

At the same time however, UOP is researching next-generation processes. On of these is based on an intermediate step consisting of the pyrolysis of biomass into bio-oil (pyrolysis oil), which can be transformed via hydroprocessing into a both green diesel and gasoline. The pyrolysis based process would allow the use of abundant lignocellulosic feedstocks. However, compared to both crude oil and vegetable oils, this pyrolysis oil is not easy to transform.

An even later generation would consist of direct conversion of lignocellulosic biomass via hydrocracking. The difference between producing biofuels via the intermediary pyrolysis step and the direct conversion process and their respective products can be seen above. Direct conversion is currently in a research phase only.

UOP notes that the current biofuels market is based on sugars and oils alone and thinks long term sustainability will require the use of lignocellulosic feeds.

Biorefinery management processes, and Iogen
This final session of the IEA Bioenergy executive committee's meeting discussed the demonstration commercial plant funded by the U.S. DOE Biomass Programme with Iogen. The Iogen plant uses straw as feedstock and will demonstrate the cellulose ethanol making process.

Another presentation was on the Project Management Center, part of DOE’s Golden Field Office. This centre manages US$1.2 billion in R&D funding for a variety of energy efficiency and renewable energy projects including biomass projects. The presenter provided an overview of the role of this office in managing the DOE biomass projects.

James Spaeth, US Department of Energy, outlined how the DOE's Project Management Center puts in efforts aimed at Managing the Biofuels Portfolio. DOE’s Office of Energy Efficiency and Renewable Energy has a dedicated field Project Management Center (PMC) at its Golden Field Office (GFO) in Colorado. The PMC function is to oversee laboratories and work with industry and academia to implement a portfolio of approximately US$1.2 billion annually, including biomass projects.

GFO uses common practices and business processes to manage projects and works from basic R&D to commercialisation. Its key functions are to implement directives from DOE headquarters into concrete solicitations and projects. GFO has the same structure as that of headquarters in that it runs solicitations and manages projects based on statements of work, including financials, technical and project milestones, and spend plans.

An important activity of GFO is working with DOE headquarters to enact sections of USA Energy Policy Act of 2005. GFO has played a major role in the selection and management of the activities conducted in the Implementation of Section 932, which calls for financial support to commercialise six biorefinery plants. In addition, GFO has begun to examine how to implement the 942 reverse auction. These efforts will jumpstart cellulosic ethanol production in USA.

The Iogen Story was presented by Maurice Hladik, of Iogen, Canada. Iogen is the well known producer of enzymes used to convert lignocellulosic biomass into ethanol and has been active in producing the biofuel since the 1970s. It has a variety of partners, including Shell and Goldman Sachs.

According to Iogen, crucial for the successful commercialisation of cellulosic ethanol refineries, is to know one's correct position in the complex landscape of players and policies, and to form partnerships and synergies between these players so that the entire industry becomes more efficient, on all fronts.

Iogen’s demonstration plant exclusively uses straw and is a successful example of an operating demonstration facility. The plant uses a cellulose ethanol process and integrates all key unit operations into one continuous process. Iogen’s enzymes are designed around the process, and the process is designed around the enzymes. The company believes that cellulose ethanol could displace more than 30% of the United States' present petroleum consumption.

Picture opening this article: The fermenter of Iogen's biorefinery in Ottowa, the world's first cellulosic biomass conversion facility. Courtesy: Iogen Corp.

All images are taken from the respective presentations.

IEA Bioenergy: The Biorefinery Concept - workshop held in conjunction with ExCo59 in Golden, USA on 25 April 2007.

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Of food and fuel: obesity rates keep rising in the US - by 2015, 75% of adults overweight, 41% obese

In the food versus fuel debate, some myths must be dispelled, such as the idea that there is somehow not enough food being produced for all people on the planet. Or that biofuels will threaten future food supplies. The fact is that there is an overabundance of extremely cheap food, but that it is badly distributed. It is well known that food insecurity is not the result of a lack of food (material scarcity), but of lack of access to food. 800 million poor people can't feed themselves because they don't earn enough income to buy food which is so abundant in this world (earlier post).

Our view, which has recently gained interest at the EU level, is that biofuel production by the world's 2 billion farmers in the South offers an opportunity to raise their incomes - the critical factor enabling the reducing of food insecurity. Studies on the potential of biofuels clearly show that we can feed the world's rapidly growing populations, and at the same time produce an abundance of bioenergy (earlier post). In the 20th century, world agriculture was aimed at securing sufficient production of food - a goal that was fully achieved (we currently produce food for 9 billion people). The 21st century must be aimed at distributing it in more equitable ways. Farm subsidies and trade barriers (to e.g. biofuels) in the wealthy West keep many developing countries in poverty and has turned them into net food importers, while these countries should in fact be major agricultural exporters (they have the agro-ecological potential). Infrastructural problems, lack of investment, political instability, bad governance and unfair socio-economic policies on the part of developing country governments are other key factors driving food insecurity and undernutrition in the South.

In the West, the overabundance of extremely cheap (subsidized) food is now so large that it has led to a health crisis of major proportions: the obesity pandemic. Speaking of distributing food in wrong ways, new research shows some staggering figures on how this global epidemic keeps expanding in the United States.

According to a just released meta-study [*abstract] carried out by researchers at the Johns Hopkins Bloomberg School of Public Health Center for Human Nutrition, America's obesity prevalence increased from 13 percent to 32 percent between the 1960s and 2004. The prevalence of obesity and overweight has increased at an average rate of 0.3–0.8 percentage points across different sociodemographic groups over the past three decades. 66% of U.S. adults are currently overweight or obese (2003-2004). By 2015, 75 percent of adults and nearly 24 percent of U.S. children and adolescents will be overweight or obese. The meta-analysis was published online in advance of the 2007 issue of the journal Epidemiologic Reviews.
The obesity rate in the United States has increased at an alarming rate over the past three decades. We set out to estimate the average annual increase in prevalence as well as the variation between population groups to predict the future situation regarding obesity and overweight among U.S. adults and children. Obesity is a public health crisis. If the rate of obesity and overweight continues at this pace, by 2015, 75 percent of adults and nearly 24 percent of U.S. children and adolescents will be overweight or obese. - Youfa Wang, MD, PhD, lead author of the study and an assistant professor in the Bloomberg School of Public Health’s Department of International Health
The obesity pandemic is no laughing matter, because here too, the problem is strongly correlated with the socio-economic status of people. Some minority and low socioeconomic status groups—such as non-Hispanic black women and children, Mexican-American women and children, low socioeconomic status black men and white women and children, Native Americans and Pacific Islanders—are disproportionately affected.

The study authors included 20 journal papers, reports and online data sets in their meta-analysis. In addition, data from four national surveys—NHANES, BRFSS, Youth Risk Behavior Surveillance System and National Longitudinal Survey of Adolescent Health—were included in order to examine the disparities in obesity. They defined adult overweight and obesity using body mass index cutoffs of 25 and 30, respectively. Children at risk for overweight and overweight were classified as being in the 85th and 95th percentiles of body mass index, respectively. The key findings include:
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  • 66% of U.S. adults were overweight or obese in 2003-2004.
  • Women 20–34 years old had the fastest increase rate of obesity and overweight.
  • 80% of black women aged 40 years or over are overweight; 50% are obese.
  • Asians have a lower obesity prevalence when compared to other ethnic groups. However, Asians born in the United States are four times more likely to be obese than their foreign-born counterparts.
  • Less educated people have a higher prevalence of obesity than their counterparts, with the exception of black women.
  • States in the southeast have higher prevalence than states on the West Coast, the Midwest and the Northeast.
  • 16% of children and adolescents are overweight and 34% are at risk of becoming overweight in 2003-2004.
  • White children and adolescents had the lowest prevalence of overweight and being at risk of overweight compared with their black and Mexican counterparts.
Our analysis showed patterns of obesity or overweight for various groups of Americans. All groups consistently increased in obesity or overweight prevalence, but the increase varied by group, making this public health issue complex. More research needs to be completed to look into the underlying causes. Obesity is likely to continue to increase, and if nothing is done, it will soon become the leading preventable cause of death in the United States. - May A. Beydoun, coauthor of the study and a postdoctoral fellow in the Bloomberg School of Public Health’s Department of International Health.
In a related study, the Johns Hopkins co-authors published a research article in the May 7, 2007, issue of the European Journal of Clinical Nutrition that found people purchase foods based on their income level and perception of a food’s health benefit and cost. Ethnicity, gender and environmental factors also impact people’s food choices.

Note: Unlike definitions for adults, the U.S. Centers for Disease Control and Prevention uses “overweight” to refer to the highest body mass index for children and adolescents. Therefore, it is inaccurate to use the term “obese” when referring to elevated body mass index in this age group.

Youfa Wang and May A. Beydoun, “The Obesity Epidemic in the United States—Gender, Age, Socioeconomic, Racial/Ethnic and Geographic Characteristics: A Systematic Review and Meta-Regression Analysis” [*abstract], Advance Access published online on May 17, 2007, Epidemiologic Reviews, doi:10.1093/epirev/mxm007.

John Hopkins Bloomberg School of Public Health: Obesity Rates Continue to Climb in the United States - July 10, 2007.

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Study of energy crops shows miscanthus twice as productive as switchgrass

At the annual meeting of the American Society of Plant Biologists in Chicago (July 7-11, 2007), scientists will present findings on how to economically and efficiently produce plant crops suitable for sustainable bioenergy. Improving the production of such biomass is important because it should significantly ease and eventually replace dependence on petroleum-based fuels.

Converting biomass into biofuels can be costly and slow. Two crops, both classified as C4 perennial grasses, have been studied extensively to determine how best to improve costs and production rates. Switchgrass (Panicum virgatum), native to the North American prairies, has been trialed across the United States. Miscanthus (Miscanthus x giganteus), a tropical grass originating from Africa and South Asia, has been studied extensively throughout the European Union. Both show great promise, but until now, nobody has been sure which crop is more efficacious.

A new study completed by Frank Dohleman of the Plant Biology Department at University of Illinois at Urbana-Champaign and his colleagues, is the first to compare the productivity of the two grasses in side-by-side field trials (picture, click to enlarge). Results from field trials throughout Illinois show that Miscanthus is more than twice as productive as switchgrass.

Dohleman's team, which included Dafu Wang, Andrew D.B. Leakey & Stephen P. Long also of University of Illinois, along with Emily A. Heaton of Ceres Inc., theorized that Miscanthus produces more usable biomass than switchgrass because of these three key attributes:
  1. Miscanthus can gain greater amounts of photosynthetic carbon per unit of leaf area
  2. Miscanthus has a greater leaf area
  3. Miscanthus has a longer growing season
The research team measured the amount of gas exchanged on the upper canopy of Miscanthus leaves from pre-dawn to post-dusk on 20 dates in the 2005 and 2006 growing seasons. The averages from two years' data showed that Miscanthus gained 33% more carbon than switchgrass:
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Integrated measurements also showed that the Miscanthus leaf area was 45% greater than switchgrass and that Miscanthus plants grew an average of eleven days longer than switchgrass. This extended growing season and accompanying lower temperatures proved to further boost the photosynthetic activity of Miscanthus. Specifically, pyruvate Pi dikinase was found to be expressed at higher rates when ambient temperatures are lower. This enzyme supports C4 photosynthesis in Miscanthus.

Unraveling the mystery of why Miscanthus is the more productive crop will enable researchers to engineer this and other potential bioenergy crops. These developments will increase production options as well as support efforts within biofuel research and industry to work with non-food based biomass resources.

Picture: Original experimental Miscanthus and Switchgrass fields in Urbana. Photo courtesy: Andrew Leakey, 2006.

Miscanthus Research at the University of Illinois

Pictures of the Miscanthus research at the University of Illinois.

Eurekalert: Illinois-based study of energy crops finds miscanthus more productive than switchgrass - July 10, 2007.

Biopact: West-Africa launches 'African Miscanthus Plantations' project - April 01, 2007

Biopact: UK scientists hunt for biomass grass types in Asia - March 13, 2007

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Germany's Nawaro Bioenergie builds world's largest biogas complex: 20 MW

German bioenergy company Nawaro Bioenergie AG is completing the world's largest integrated biogas power station in Klarsee, Penkun, in the German state of Mecklenburg-Western Pomerania.

The complex will generate 20 megawatts of electricity by fermenting energy maize by liquid manure. After fermentation the biomethane is converted by combustion into electricity and heat. The complex utilises 40 Jenbacher Gas Engines that will cogenerate 20 megawatts of electricity and 22 megawatts in thermal output. The 40 units were delivered by EnviTec which specialises in the standardisation of 500kW modules. The first module began operations in November 2006 and by now 15 modules are operating. The 20MW output is enough to meet the energy needs of a town of 50,000 people. The electricity generated at NAWARO is fed into the power grid, as agreed by utilities.

The Klarsee complex is located close to the German-Polish border, where around 50 to 60 agricultural enterprises and farmers from both countries deliver the feedstock. Approximately 300,000 tonnes of specially bred maize silage, 60,000 tonnes of manure and 20,000 tonnes of grain per year are required. Silage maize is particularly well suited as a renewable fuel for biogas as it contains more energy than most other feedstocks. Per hectare, conversion into biogas shows around twice the yields of conversion into liquid biofuels.

The carbon-neutral and self-contained cycle of raw material and energy is also a worldwide first: nearly all the fermentation residues produced are converted into high-quality depot fertiliser to be sold on the international market (schematic, click to enlarge). The vicinity of the Baltic Sea ports represents a reloading point for shipping out the fertilisers. This brings in an additional €50-150 per tonne of feedstock. All that is left after a processing cycle is clear water, making the power station’s total efficiency and environmental performance superior to that of conventional farm-based biogas plants.

Biogas is the least carbon-intensive of all renewable energies (previous post). In the long-term, the production of the biomethane can be integrated in carbon capture and storage (CCS) concepts, which would result in carbon-negative energy systems. Only bioenergy-based energy systems can acquire this status, and could thus radically help reducing global carbon dioxide emissions. Biogas is particularly interesting in this respect, because it offers the potential for low-cost carbon capture, by separating CO2 efficiently before the combustion of the gas (earlier post).

Behind the industrial-scale project in Klarsee stands the vision - now prevalent throughout Germany - that electricity from biogas can play an integral part of the energy market worldwide. Some projections show that the potential is so large that the EU could replace all natural gas imports from Russia with biogas, by 2020 (previous post). Upgraded and cleaned, biomethane can be fed into the existing natural gas infrastructure. Several projects in Germany are already doing this, and a large EU-funded study on feeding biomethane into NG pipelines is analysing the issue in-depth:
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The vision is backed up by numbers: German biogas units produced 2.9 billion kilowatt-hours of electricity in 2005, or about three times as much electricity as the amount supplied by photovoltaic solar cells. The new plant promises to push biomass energy to new levels - using all of its standardized modules it will generate electricity with a total capacity of 20 megawatt. NAWARO has two other biogas parks of the same size are under development.

NAWARO’s financing is done by Doric Asset Finance, which set up the Geno Bioenergie 1 fund of around €100m for the Klarsee biogas park. Minimum investment was €10,000; the first distribution for investors is projected for November 2008 at 5.5% of the contribution, with further 9% payments per year from 2009 onwards.

Biogas is the fastest growing renewable energy sector in Europe, with electricity generated from biogas growing much more rapidly than the overall biomass, wind and solar sector in recent years. More than 2,500MW have been installed to date in Europe. Germany leads the field in electricity generation from biogas, with about 3,500 installed plants and a combined capacity of 1,100 MW. The German Biogas Association estimates that this capacity could grow up to 9,500MW by the year 2020.

Besides the potential to feed the green gas into the natural gas grid, it can also be used as a transport fuel in CNG vehicles.

Compiled from sources found at Nawaro Bioenergy, AG.

Nawaro Bioenergie AG, website.

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Texas launches Bioenergy Strategy

Texas Governor Rick Perry joined bioeconomy leaders to announce Texas’ Bioenergy Strategy, highlighting the state’s achievements in creating a balanced energy portfolio through developments in bioenergy and other energy resources. The governor also awarded a $5 million Texas Emerging Technology Fund grant to Texas A&M University for research and biofuel advancements.
As a state that grows by 1,000 new residents each day, Texas must take a more innovative approach to developing new methods and research in the field of energy. By intersecting three of our state’s largest industries – energy, agriculture and petrochemicals – researchers in Texas have made tremendous progress in developing bioenergy and fuel sources from such things as plant cells, compost and fertilizers. - Texas Governor Rick Perry
In 2004, Gov. Perry spearheaded efforts to build industry clusters comprised of leaders in six industry sectors economists forecasted to be future engines of economic development in the United States. One of the sectors, energy, sparked partnerships between the private sector, academia, and the state and federal government to research bioenergy and fuel opportunities in Texas. Today, scientists have developed unique avenues through use of natural materials to create environmentally clean and efficient energy sources. Bioenergy and fuel products are successfully competing with traditional manufacturing processes thanks to their ability to cut costs by using natural products, while promoting a greener and more eco-sensitive business.

During the last year, the bioenergy initiative evolved into a larger project focused on the broad realm of bioproducts. Advancements in such fields as biomaterials, biochemicals and biopharmaceuticals have ignited the creation of a bioeconomy in Texas:
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In a place like Texas that not only houses unique terrains and ecosystems unlike any other the world, but also has access to ports, international borders, and other venues for trade, we have a distinct opportunity to further develop and leverage more of our state’s resources to develop a variety of bioproducts. - Texas Governor Rick Perry
At the event, Gov. Perry awarded a $5 million Texas Emerging Technology grant to Texas A&M University to help recruit commercially-focused faculty to market innovative research for the next generation of biofuels. Texas A&M and Chevron are also partnering on research efforts to achieve accelerated harvesting of non-food crops for conversion into biofuel products.

The governor recognized the newly formed Texas Bioproducts Industry Council, which will work closely with the private and public sector to strategize the future of bioproducts in Texas. Ongoing research has the potential to promote Texas to a self-sufficient post for energy and fuel, while introducing global solutions to growing energy needs.

Office of the Governor: Gov. Perry Rolls Out Texas' Bioenergy Strategy - July 9, 2007.

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IEA forecasts world biofuel output to double from 2006 to 2012

The International Energy Agency (IEA) just released its Medium-Term Oil Market Report in which it forecast global biofuel output will double from 2006 levels to 1.75 million barrels a day in 2012. In the Market Reort, the agency, which is the energy security watchdog for the Organization for Economic Cooperation and Development (OECD), included its second annual report on biofuels in.

The IEA projects increasing tightness in the market for petroleum and sees OPEC spare capacity decline to minimal levels by 2010. For the first time, the agency elaborates on the concept of 'Peak Oil'.

Biofuel outlook
The IEA raised its 2006 biofuel supply baseline by 79,000 barrels a day to 863,000 barrels a day due to stronger-than-expected growth and more detailed capture of projects. Still the agency warned while the forecasts showed a "considerable rate of growth" for global biofuel production they were significantly below capacity planned for 2012.

Technology for significant production of second generation biofuels based on lignocellulosic feedstocks isn't expected by the IEA to come into play by end of the 2012 outlook period.

The IEA projects an actual 2012 output of 1.75 million barrels a day to fall short of potential capacity of 2.92 million barrels a day. IEA forecasts 50% global biofuel supply growth between 2007 and 2009, mostly in the U.S. IEA projects daily U.S. biofuel production to grow from 330,000 barrels in 2006 to 533,000 barrels in 2009, but to then remain steady to 2012.
We anticipate that ethanol (about 78% of total biofuels on average) and biodiesel will displace altogether 1.1 mb/d of oil product demand in 2007, rising to almost 1.8 mb/d in 2012. Ethanol is expected to displace roughly 27% of incremental gasoline demand; by contrast, biodiesel will only displace about 5% of incremental gasoil demand. Despite its rapid growth, however, ethanol consumption will only account for about 6% of global gasoline demand by the end of the forecast period, while biodiesel use will represent even less (slightly more than 1%) as a proportion of global gasoil consumption. Overall, biofuels demand will be concentrated in OECD countries.
The agency said U.S. ethanol profit margins should further retreat over the next two years with the high price of corn. "Recent news reports have indicated that the U.S. is already experiencing a surplus of ethanol," the report said.

However due to Brazil's competitive advantage in production costs, agriculture and infrastructure, IEA expects supply growth to continue beyond 2009. Brazil's daily biofuel output is forecast to rise from 293,000 barrels in 2006 to 421,000 barrels in 2009 and 528,000 barrels in 2012.

The agency expects Europe to maintain its share of half the world's biodiesel production through 2012, approximately doubling biodiesel output from 2006 to 213,000 barrels a day from 2009. But starting in 2008, IEA looks for strong output growth in Europe's ethanol output:
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IEA forecasts Europe's overall daily biofuel output at 377,000 barrels by 2009, up from 150,000 barrels in 2006. However daily European output is seen steady from 2009-2012. The agency said it has the greatest doubts for proposed projects being realized in the Asia-Pacific region.

IEA projects only a third of 2012 proposed daily output capacity of 604,000 barrels will be produced. And about a third of this unrealized production will be in China, as enthusiasm for biofuels is tempered by awareness of growing food and water needs, IEA said.

IEA said while biofuels will still only account for 2% of global oil supplies by 2012, they will account for 13% of volume growth in gasoline and gasoil/diesel demand near-term. "This is causing investors to reevaluate the need for incremental refinery capacity," said IEA.

The IEA anticipates “increasing market tightness” beyond 2010 for oil, due to stronger demand and OPEC spare capacity declining to minimal levels by 2012.

The IEA forecasts that global oil product demand will expand by 1.9 mb/d or 2.2% per year on average, reaching 95.8 mb/d by 2012. Growth will be driven by the stronger oil demand growth in non-OECD countries, particularly in Asia and the Middle East, where demand will grow more than three times faster than that of the OECD economies. Transportation fuels will account for the bulk of demand growth in both OECD and non-OECD countries.

Peak oil
The IEA report notes that “The concept of peak oil production and its timing are emotive subjects which raise intense debate.”
Much rests on the definition of which segment of global oil production is deemed to be at or approaching peak. Certainly our forecast suggests that the non-OPEC, conventional crude component of global production appears, for now, to have reached an effective plateau, rather than a peak.

Having attained 40 mb/d back in 2003, conventional crude supply has remained unchanged since and could do so through 2012. While significant increases are expected from the FSU, Brazil and sub-Saharan Africa, these are only sufficient to offset declines in crude supply elsewhere. Put another way, all of the growth in non-OPEC supply over 2007-2012 comes from gas liquids, extra heavy oil, biofuels (and, by 2012, 145 kb/d of coal-to-liquids from China). As overall non-OPEC liquids capacity increases, this plateau reduces the share of non-OPEC conventional crude supply from 77% in 2000, to 74% in 2006 and 67% in 2012.

While there might be a temptation to extrapolate this trend, citing a peak in conventional oil output, a degree of caution is in order. Firstly, the concept of ‘conventional’ oil changes with time, technology and economics. In the early 1970s, much offshore production was deemed unconventional, but this portion of global supply has since grown to account for 30% of the total. Evolving economies of scale and infrastructure development could do the same for GTL, oil sands and ultra-deepwater reserves in the future, shifting today’s unconventional resource into tomorrow’s conventional supply category.

Moreover, rapidly-growing condensate and NGL supply is scarcely ‘non-conventional’ in a technical sense now. We also note that for certain regions, notably the FSU and West Africa, the turn of the current decade is likely to mark a hiatus in crude supply growth. Strong growth is expected to resume here towards the middle of the next decade. Whether this will be sufficient to offset the declines expected for mature OECD crude supply, preventing overall decline for non-OPEC, is less easy to predict.

Finally, we note that focussing on non-OPEC crude alone is a rather selective way of considering the sustainability of global oil production. Peak or plateau production is frequently taken as shorthand for impending resource exhaustion. While hydrocarbon resources are finite, nonetheless issues of access to reserves, prevailing investment regime and availability of upstream infrastructure and capital seem greater barriers to medium-term growth than limits to the resource base itself.
Refining capacity
The IEA forecasts global crude distillation capacity to rise by 10.6 mb/d between 2007-2012. New investments add 9.1 mb/d of crude distillation capacity and existing refineries in North America, Europe and the Pacific are assumed to add a further 1.5 mb/d through capacity creep. The Middle East and Asia will account for 6.7 mb/d of new crude distillation.

IEA: Medium-Term Oil Market Report - July 2007

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